The Federal Trade Commission implemented new guidelines relating to social media marketing at the end of last year, while Facebook has also taken steps to ensure that marketers use the platform appropriately. In the UK the Advertising Standards Association is also in the process of drawing up rules that will address social media marketing. So what do marketers need to know about what they can and can’t do from a regulatory standpoint – and what best practices would they be wise to adhere to? We spoke with Sam Decker, former board member of the Word of Mouth Marketing Association (WOMMA) and CMO of Bazaarvoice.

Ensure full disclosure from endorsing parties – or better yet, don’t pay for endorsements at all

While the UK’s Advertising Standards Association (ASA) continues to draw up regulations for social media marketing, the US has already taken steps to regulate the practice. In December, the FTC implemented new guidelines regarding the relationships between advertisers and endorsements that encompass social media. As a result of this, businesses must disclose "material connections" between endorsed and endorsing parties. This means that businesses must ensure that if they provide free gifts or payment to, for example, a blogger who is writing about them, the blogger must disclose this fact. This requirement has been in place for traditional media since 1980.

However, Decker recommends that brands simply steer clear of paying for recommendations and endorsements. "The advice from us is that of course you can solicit people to write reviews on their own – they have your product, they have their experiences so they can tell stories and write reviews. But don’t say you’ll give them 10 bucks to write the review," he says.

"We did a study a couple of years ago and 98% of people trust the reviews they read in the UK. There are rules that forbid companies from writing their own reviews or fraudulent reviews, but regardless of regulation, brands should look at it from the consumer’s standpoint. When you read something, you assume that it is a real person, that they are not falsely representing themselves or the product, that there is no bias, and that it is true authentic voice of the customer.

"As a marketer, anything you do to taint that, whether it is regulated or not, should be taken very seriously because you could take a major brand hit. For instance, there is a story at present about a company whose agency has been paying bloggers to post stories about the company – they are not reviews but you would read the blog and assume that they are just random people who like the brand. But people didn’t know that they were paid. And whether the FTC regulates that or not, as a consumer we feel that is dishonest – and that could come back to bite the brand."

Use the channel appropriately

Facebook implemented new rules for contests last November (updated in December), which prohibit brands running any promotions that require users to become a fan, interact with a story, or do anything else outside an application tab or canvas page in order to enter. As such, businesses are now banned from bumping up their fan numbers or driving up ‘like’ clicks on their content, by using competitions and sweepstakes. While this may have closed a loophole on Facebook, as yet there are no similar regulations on other social platforms, leaving the door open for brands to take advantage. Nonetheless, Decker believes this could backfire.

"If I visit a Facebook page for a brand and see they have 10,000 fans, my reaction is that they must be a very popular brand or product. The whole social nature of, for instance, the ‘like’ button means that you are announcing to all of your friends that you actually like that product or brand, not that you are entering a sweepstake," he explains. "As a marketer, if several bloggers pick up on the fact that you are doing a sweepstake and say that all of your Facebook fans are false, then you have just ruined your whole Facebook strategy. We are living in an age where authenticity rules, so it is not a good idea."

Brands have also used social channels for other unscrupulous activity. For instance, Habitat was recently caught spamming on Twitter, by adding topics that were trending such as #iphone to the front of promotional tweets that were trying to get users to sign up to its customer database. Following outcry from the Twitter community, the furniture maker was forced into an apology. Decker believes that the brand damage caused by inappropriate social activity such as spamming far outweighs any benefit that the brand may have been driving for.

"These communications in these mediums are social in nature, and the people in them want to protect that environment and want to make it commercial-free - which is why advertising gets such low clicks in Facebook and most social media. When someone advertises on Facebook or Twitter they won’t be vilified, but if they use the social context of the medium itself and abuse it then the same medium they are using will turn against them," he says.

Social media is based on two-way dialogue - so you can't just push marketing messages

Last year Eurostar got itself into a twist over its Twitter profile, which was good at pushing out marketing messages about ticket offers, but not so good at fielding queries about the train service – something that was cruelly exposed when its trains became stuck in the channel tunnel last winter. As it transpired, Eurostar had hired a marketing agency to run its Twitter account which had no direct channel into the firm, leaving it unable to respond to customer service queries.

Elsewhere, Rentokil was an interactive tweeter until members of the scientific community cast doubt on figures that the company quoted in a press release. As one eminent member of the community aimed a few pointed questions at Rentokil’s Twitter profile, radio silence suddenly descended, to the consternation of those in the Twittersphere.

"People expect two-way dialogue and if you don’t have it, if you are just trying to use it as a broadcast mechanism, then you are going to be found out – you are not really using social media the way it is supposed to be used," Decker suggests. "The right way to have done it would have been either to thank him for highlighting the mistake and then correct it and be totally transparent and honest, or to engage in dialogue and debate to get to some conclusion - they may not reach a resolution but at least you would have that open dialogue that people could share in and see. And in some ways that actually draws more attention to the brand or product or research.

"The ideal way to approach it is that before they broadcast the research they should have engaged influencers such as this person, gather feedback, maybe do a Q&A to solicit advice before they even did the study. Typical marketing, however, is to hide behind the walls, build the product, come out with the message and there’s some social media channels to broadcast it out there. Marketers need to be less like broadcasters and more like facilitators of conversations, all the way up from building the product to downstream marketing."

Be honest about your identity

When Honda unveiled its new Crosstour car on a dedicated Facebook page, it was stunned by the negative response from posters. While the new model was panned by all and sundry, a lone voice – Eddie Okubo - vehemently defended the vehicle on the page and expressed his approval. Unfortunately, Okubo turned out to be Honda’s product manager, and the auto manufacturer was forced to remove his comments.

"It wouldn’t have been so bad if he had been clear he was the product manager and instead of saying what a great car it is, had simply said thanks for the great feedback and that Honda will consider it," says Decker. "In a situation like this, you only have two actions you can take. Either you understand that it means you are wrong and that you must change things – and we have lots of examples of firms doing this and improving their products as a result of this interaction – or you close your eyes and ears to it all and probably die a slow death.

"Of course you have to take in other forms of data to determine if the people who are fans of that Facebook page are the demographic that you’re aiming for with the car. But if you are smart you can take the feedback and make changes, so you’re then going to come out with better products that will then be applauded in social media, and your marketing costs go down and your P&L looks better."

Provide your employee base with social media guidelines

Last year, a Belkin employee was found soliciting people to write positive reviews for one of their products on Amazon. The story rapidly became national news leading to huge criticism from the online community. The company president was forced to respond to the backlash, emphasising that Belkin would not engage in unethical practices, but admitting that "one of our employees" may have been responsible.

"If word of mouth rules, then social media is amplifying the voice of the customer, and your equity is built on the authenticity of what customers are saying about your product and brand," suggests Decker. "You cannot risk that. And businesses are now becoming much more proactive with their employee base to set out their policies – that they cannot go out and write reviews themselves, or get people to write reviews, because they have to be authentic. If they break the trust then the whole thing comes tumbling down.

"One low level employee was responsible for giving Belkin a national media authenticity scar. In retrospect, the company should have been much more proactive with its employee policy and stressed that staff will be terminated for any marketing that is not authentic and could break trust with the customer. Marketers now need to have social media guidelines with the employee base."

Ensure your brand message isn’t in conflict with what the community is saying

As Honda demonstrated, not all products and services are well received by the customer community. And social platforms provide customers with the opportunity to make themselves better heard than ever before. As such, if your marketing message is completely at odds with the prevailing opinions of the public, the community will be quick to jump all over it and the campaign will collapse. Conversely, brands can use marketing to respond to community opinions and drive success.

One example of this is Domino’s Pizza, which reacted to ongoing criticism of the quality of its pizzas by launching a campaign admitting that its products had been poor. The campaign demonstrated how it had listened to its customers, acknowledged that its pizzas were terrible, and had therefore totally reinvented their products, inviting customers to give its pizzas another try.

Video of dominosr_pizza_turnaround

"They ran the campaign with TV ads and social media and because it was such a disarming campaign it was amplified by social media – bloggers were posting about the pizza and it was a really talkative topic," explains Decker. "Domino’s really got it. Here is a company that understood that customers were providing this feedback in multiple channels, so they went back and improved the product and then had the bravery to apologise and say please try us again.

"Domino’s stock went up 50%, they are all over the news, and now they are using social media for customers to take pictures of their pizza and they are leveraging it to amplify this campaign and continue it on. What I like about this campaign is that it isn’t just about the marketing and saying ‘we have a good pizza now’. They truly did go back and fix the business and the product and then had the transparency and humility to acknowledge the problems and apologise. That authenticity resonates with customers."

About Neil Davey

Neil Davey is the managing editor of MyCustomer. An experienced business journalist and editor, Neil has worked on a variety of newspapers, magazines and websites over the past 15 years, including Internet Works, CXO magazine and Business Management. He joined Sift Media in 2007.